Hertz 2009 Annual Report Download - page 91

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Equipment Rental Segment
Interest expense for our equipment rental segment of $53.3 million for the year ended December 31,
2009 decreased 51.9% from $110.8 million for the year ended December 31, 2008. The decrease was
primarily due to a decrease in weighted average interest rate on our borrowings and a decrease in the
weighted average debt outstanding due to reduced fleet size.
Other
Other interest expense relating to interest on corporate debt of $310.9 million for the year ended
December 31, 2009 increased 1.3% from $306.8 million for the year ended December 31, 2008.
Interest and Other Income, Net
Interest and other income, net increased $39.7 million due to a gain of $48.5 million, net of transaction
costs recorded in connection with the buyback of portions of our Senior Notes and Senior Subordinated
Notes, partly offset by a decrease in interest income of $8.8 million. The decrease in interest income
related to lower cash balances and interest rates during the period, partly offset by interest income
received in connection with a value added tax reclaim in the United Kingdom.
Impairment Charges
Impairment charges represent non-cash impairment charges incurred during the fourth quarter of 2008
relating to our goodwill, other intangible assets and property and equipment. See Notes 1 and 2 to the
Notes to our consolidated financial statements included in this Annual Report under the caption
‘‘Item 8—Financial Statements and Supplementary Data.’’
Adjusted Pre-Tax Income
Car Rental Segment
Adjusted pre-tax income for our car rental segment of $465.3 million increased 60.9% from
$289.1 million for the year ended December 31, 2008. The increase was primarily due to strong cost
management performance, lower overall fleet costs and staffing/wage levels commensurate with rental
volumes. Adjustments to our car rental segment income before income taxes and noncontrolling interest
on a GAAP basis for the years ended December 31, 2009 and 2008, totaled $275.2 million and
$674.4 million, respectively. See footnote c to the table under ‘‘Results of Operations’’ for a summary and
description of these adjustments.
Equipment Rental Segment
Adjusted pre-tax income for our equipment rental segment of $76.4 million decreased 71.9% from
$272.0 million for the year ended December 31, 2008. The decrease was primarily due to reductions in
volume and pricing and lower net proceeds received in excess of book value on the disposal of used
equipment, partly offset by strong cost management performance. Adjustments to our equipment rental
segment income before income taxes and noncontrolling interest on a GAAP basis for the years ended
December 31, 2009 and 2008, totaled $97.1 million and $901.3 million, respectively. See footnote c to
the table under ‘‘Results of Operations’’ for a summary and description of these adjustments.
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